6-K - CPAC - Equibles

UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM6-K

REPORTOF FOREIGN ISSUERPURSUANT TO RULE 13a-16 OR 15b-16 OFTHE SECURITIES EXCHANGE ACT OF 1934

Forthe month of July 2021

CommissionFile Number 001-35401

CEMENTOS PACASMAYO S.A.A.

(Exact name of registrant as specified in its charter)

PACASMAYOCEMENT CORPORATION

(Translation of registrant’s name into English)

Republicof Peru

(Jurisdiction of incorporation or organization)

CalleLa Colonia 150, Urbanización El Vivero

Surco, Lima

Peru

**(**Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

CEMENTOSPACASMAYO S.A.A.

The following exhibit is attached:

EXHIBIT NO.	DESCRIPTION
99.1	Unaudited interim condensed consolidated financial<br>statements as of June 30, 2021 and for the three and six-month periods then ended

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CEMENTOS PACASMAYO S.A.A.
By:	/s/ CARLOS JOSE MOLINELLI MATEO
Name:	Carlos Jose Molinelli Mateo
Title:	Stock Market Representative
Date:	July 20, 2021

Exhibit99.1

Cementos Pacasmayo S.A.A. and Subsidiaries
Unaudited<br> interim condensed consolidated financial statements as of June 30, 2021 and for the three and six-month periods then ended

Cementos Pacasmayo S.A.A. and Subsidiaries

Unaudited interim condensed consolidated financial statements as of June 30, 2021 and for the three and six-month periods then ended

Content

Report on review of interim condensed consolidated financial statements	F-1
Interim condensed consolidated financial statements
Interim condensed consolidated statements of financial position	F-2
Interim condensed consolidated statements of profit or loss	F-3
Interim condensed consolidated statements of other comprehensive income	F-4
Interim condensed consolidated statements of changes in equity	F-5
Interim condensed consolidated statements of cash flows	F-6
Notes to the interim condensed consolidated financial statements	F-8

Paredes, Burga & Asociados Sociedad Civil de Responsabilidad Limitada

Report on review of interim condensed consolidated financial statements

To the Board of Directors and Shareholders of Cementos Pacasmayo S.A.A.

Introduction

We have reviewed the accompanying interim condensed consolidated statement of financial position of Cementos Pacasmayo S.A.A. (a Peruvian company) and its Subsidiaries (together the “Group”) as of June 30, 2021, and the related interim condensed consolidated statements of profit or loss, other comprehensive income, changes in equity and cash flows for the three and six-month periods then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Auditing Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of the persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.

Lima, Peru

July 19, 2021

Countersigned by:

/s/<br> Oscar Mere

Oscar Mere

C.P.C.C. Register No. 39990

Inscrita en la partida 11396556 del Registro de Personas Jurídicas de Lima y Callao

Miembro de Ernst & Young Global

F-1

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of financial position

As of June 30, 2021 (unaudited) and December 31, 2020 (audited)

	Note	As<br> of <br> June 30,<br> 2021			As<br> of<br> December 31,<br> 2020
		S/(000)			S/(000)
Assets
Current<br> assets
Cash<br> and cash equivalents	3		368,652			308,912
Trade<br> and other receivables	4		94,923			84,412
Income<br> tax prepayments			11,738			18,076
Inventories	5		500,267			460,610
Prepayments			27,318			5,729
Total<br> current asset			1,002,898			877,739
Non-current<br> assets
Trade<br> and other receivables	4		11,110			5,215
Financial<br> instruments designated at fair value through other comprehensive income	15		692			692
Derivative<br> financial instruments	15		75,533			42,247
Property,<br> plant and equipment	6		1,979,265			2,014,508
Intangible<br> assets			49,665			49,640
Goodwill			4,459			4,459
Deferred<br> income tax assets			13,439			15,618
Right<br> of use asset	7		5,445			6,006
Other<br> assets			152			160
Total<br> non-current asset			2,139,760			2,138,545
Total<br> assets			3,142,658			3,016,284
Liability<br> and equity
Current<br> liabilities
Trade<br> and other payables	8		200,135			180,190
Dividends<br> payable	8		342,341			7,686
Financial<br> obligations	9<br> y 15		228,588			65,232
Lease<br> liabilities	7		1,711			1,531
Income<br> tax payables			6,473			1,051
Provisions	10		9,498			9,380
Total<br> current liabilities			788,746			265,070
Non-current<br> liabilities
Financial<br> obligations	9<br> y 15		1,076,610			1,203,352
Lease<br> liabilities	7		4,771			5,102
Non-current<br> provisions	10		30,280			25,341
Deferred<br> income tax liabilities			148,900			149,864
Total<br> non-current liabilities			1,260,561			1,383,659
Total<br> liability			2,049,307			1,648,729
Equity
Capital<br> stock			423,868			423,868
Investment<br> shares			40,279			40,279
Investment<br> shares holds in treasury			(121,258	)		(121,258	)
Additional<br> paid-in capital			432,779			432,779
Legal<br> reserve			168,636			168,636
Other<br> accumulated comprehensive results			(28,843	)		(33,378	)
Retained<br> earnings			177,890			456,629
Total<br> equity			1,093,351			1,367,555
Total<br> liability and equity			3,142,658			3,016,284

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F-2

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of profit or loss

For the three and six-month periods ended June 30, 2021 and June 30, 2020 (unaudited)

		For<br> the three-month period <br> ended June 30,						For<br> the six-month period <br><br>ended June 30,
	Note	2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)
Sales<br> of goods	12		440,923			114,345			905,728			413,603
Cost<br> of sales			(324,522	)		(112,203	)		(656,101	)		(319,450	)
Gross<br> profit			116,401			2,142			249,627			94,153
Operating<br> income (expense)
Administrative<br> expenses			(47,213	)		(33,263	)		(94,302	)		(73,578	)
Selling<br> and distribution expenses			(14,172	)		(8,268	)		(28,355	)		(21,993	)
Other<br> operating income (expense), net			1,107			(848	)		429			(644	)
Total<br> operating expenses, net			(60,278	)		(42,379	)		(122,228	)		(96,215	)
Operating<br> profit			56,123			(40,237	)		127,399			(2,062	)
Other<br> income (expenses)
Finance<br> income			279			1,163			780			1,697
Finance<br> costs			(21,054	)		(23,184	)		(41,890	)		(43,813	)
Cumulative<br> net loss on settlement of derivative financial instruments			-			-			(1,569	)		-
Net<br> profit for valuation of trading derivative financial instruments			45			1,445			500			4,391
Gain<br> (loss) from exchange difference, net			3,967			(2,746	)		417			(6,896	)
Total<br> other expenses, net			(16,763	)		(23,322	)		(41,762	)		(44,621	)
Profit<br> before income tax			39,360			(63,559	)		85,637			(46,683	)
Income<br> tax expense	11		(11,696	)		18,010			(26,172	)		11,858
Profit<br> for the period			27,664			(45,549	)		59,465			(34,825	)
Earnings<br> per share
Basic<br> profit for the period attributable to equity holders of common shares and investment shares of the parent (S/ per share)	14		0.06			(0.11	)		0.14			(0.08	)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F-3

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of other comprehensive income

For the three and six-month periods ended June 30, 2021 and June 30, 2020 (unaudited)

		For<br> the three-month period<br> <br>ended<br> June 30,						For<br> the six-month period<br> <br>ended<br> June 30,
	Note	2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)
Profit<br> for the period			27,664			(45,549	)		59,465			(34,825	)
Other<br> comprehensive income
Other<br> comprehensive income to be reclassified to profit or loss in subsequent periods:
Net<br> (loss) gain on cash flow hedges	15(a)		537			(3,015	)		6,432			1,773
Deferred<br> income tax	11		(159	)		888			(1,897	)		(523	)
Other<br> comprehensive income for the period, net of income tax			378			(2,127	)		4,535			1,250
Total<br> comprehensive income for the period, net of income tax			28,042			(47,676	)		64,000			(33,575	)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F-4

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of changes in equity

For the six-month period ended June 30, 2021 and June 30, 2020 (unaudited)

	Attributable to equity holders of the parent
	Capital <br> stock		Investment<br> shares		Treasury<br> shares			Additional paid-in capital		Legal<br> reserve		Unrealized gain on financial instruments designated at fair value			Unrealized gain on <br>cash flow hedge			Retained earnings			Total <br> equity
	S/(000)		S/(000)		S/(000)			S/(000)		S/(000)		S/(000)			S/(000)			S/(000)			S/(000)
Balance as of January 1, 2020		423,868		40,279		(121,258	)		432,779		168,636		(2,103	)		(17,750	)		497,200			1,421,651
Profit for the period		-		-		-			-		-		-			-			(34,825	)		(34,825	)
Other comprehensive income		-		-		-			-		-		-			1,250			-			1,250
Total comprehensive income		-		-		-			-		-		-			1,250			(34,825	)		(33,575	)
Balance as of June 30, 2020		423,868		40,279		(121,258	)		432,779		168,636		(2,103	)		(16,500	)		462,375			1,388,076
Balance as of January 1, 2021		423,868		40,279		(121,258	)		432,779		168,636		(14,463	)		(18,915	)		456,629			1,367,555
Profit for the period		-		-		-			-		-		-			-			59,465			59,465
Other comprehensive income		-		-		-			-		-		-			4,535			-			4,535
Total comprehensive income		-		-		-			-		-		-			4,535			59,465			64,000
Dividends, note 8		-		-		-			-		-		-			-			(338,204	)		(338,204	)
Balance as of June 30, 2021		423,868		40,279		(121,258	)		432,779		168,636		(14,463	)		(14,380	)		177,890			1,093,351

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F-5

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of cash flows

For the three and six-month period ended June 30, 2021 and June 30, 2020 (unaudited)

		For the three-month period<br> <br>ended June 30						For the three-month period<br> <br>ended June 30
		2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)
Operating activities
Profit (loss) before income tax			39,360			(63,559	)		85,637			(46,683	)
Non-cash adjustments to reconcile profit before income tax to net cash flows
Depreciation and amortization			33,830			34,539			67,685			68,652
Finance costs			21,054			23,184			41,890			43,813
Long-term incentive plan	13		1,968			1,440			3,639			2,879
Loss on the valuation of trading derivative financial instruments			-			-			1,569			-
Estimate expected credit loss	4		486			1,054			1,193			2,176
Unrealized exchange difference related to monetary transactions			(9,478	)		5,567			(6,902	)		6,014
Net gain on settlement of trading derivative financial instruments			(45	)		(1,445	)		(500	)		(4,391	)
Net gain on disposal of property, plant and equipment	6		(1,117	)		(456	)		(1,159	)		(1,632	)
Finance income			(279	)		(1,163	)		(780	)		(1,697	)
Other operating, net			687			255			435			(1,290	)
Working capital adjustments
(Increase) decrease in trade and other receivables			(5,953	)		22,870			(11,163	)		35,479
(Increase) decrease in prepayments			(2,525	)		5,970			(21,589	)		680
(Increase) decrease in inventories			8,112			(898	)		(39,631	)		(6,674	)
Increase (decrease) in trade and other payables			(2,927	)		(4,807	)		17,845			(43,375	)
			83,173			22,551			138,169			53,951
Interests received			297			76			1,824			594
Interests paid			(336	)		(1,727	)		(32,624	)		(31,438	)
Income tax paid			(11,795	)		(591	)		(24,258	)		(14,594	)
Net cash flows provided by operating activities			71,339			20,309			83,111			8,513

F-6

Interim condensed consolidated statements of cash flows (continued)

	Note	For the three-month period <br>ended June 30,						For the six-month period <br>ended June 30,
		2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)
Investing activities
Proceeds from sale of property, plant and equipment			1,999			960			3,254			1,801
Collection of loan granted to third parties			142			-			282			91
Purchase of property, plant and equipment			(18,740	)		(6,016	)		(29,397	)		(18,226	)
Purchase of intangibles assets			(2,225	)		(1,247	)		(3,988	)		(2,809	)
Redemption of term deposits with original maturity greater than 90 days			-			127,990			-			127,990
Opening of term deposits with original maturity greater than 90 days.			-			-			-			(208,990	)
Loans granted to third parties			-			(1,695	)		-			(2,413	)
Net cash flows used in investing activities			(18,824	)		119,992			(29,849	)		(102,556	)
Financing activities
Income from settlement of derivative financial instrument			-			-			3,879			-
Dividends returned			197			240			197			240
Payment of hedge finance cost			-			-			(7,202	)		(7,732	)
Payment of lease liabilities	7		(675	)		(71	)		(1,174	)		(531	)
Dividends paid			(121	)		(15	)		(480	)		(45,906	)
Bank overdraft			-			57,184			-			70,691
Loan received	9		-			-			-			212,350
Net cash flows (used in) provided by financing activities			(599	)		57,338			(4,780	)		229,112
Net increase in cash and cash equivalents			51,916			197,639			48,482			135,069
Net foreign exchange difference			11,422			62			11,258			(385	)
Cash and cash equivalents at the beginning of the period			305,314			5,249			308,912			68,266
Cash and cash equivalents at the end of the period	3		368,652			202,950			368,652			202,950
Transactions with no effect in cash flows:
Unrealized exchange difference related to monetary transactions			(9,478	)		5,567			(6,902	)		6,014
Recognition of right-of-use assets and lease liabilities during the period	7		5			-			217			7,504

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F-7

Cementos Pacasmayo S.A.A. and Subsidiaries

Notes to interim condensed consolidated financial statements (unaudited)

As of June 30, 2021 and 2020, and December 31, 2020

1.	Economic activity
(a)	Economic<br> activity -
---	---

Cementos Pacasmayo S.A.A. (hereinafter “the Company”) was incorporated in 1957 and, in accordance with the General Law of Peruvian Companies, is an open stock corporation with publicly traded share. The Company is a subsidiary of Inversiones ASPI S.A., which holds 50.01 percent of the Company’s common shares as of June 30, 2021, December 31, 2020 and June 30, 2020.

The address registered by the Company is Calle La Colonia No.150, Urbanización El Vivero, Santiago de Surco, Lima, Peru.

The main activity of the Company is the production and commercialization of cement, precast, concrete and quicklime in the northern region of Peru.

The interim condensed consolidated financial statements of the Company and its subsidiaries (hereinafter the “Group”) as of June 30, 2021 and for the six-month period then ended, were approved for issuance by the Company’s Management on July 19, 2021. The consolidated financial statements as of December 31, 2020 have been approved by the General Meeting of Shareholders, on March 23, 2021.

(b)	COVID<br> 19 -

COVID-19, an infectious disease caused by a new virus, was declared a world-wide pandemic by the World Health Organization (“WHO”) on 11 March 2020.The measures to slow the spread of COVID-19 have had a significant impact on the global economy.

On March 15, 2020, the Peruvian government declared a nationwide state of emergency, effectively shutting down all business considered non-essential (with exception of food production and commercialization, pharmaceuticals and health). As a result, since that date, we shut-down our three plants until the Peruvian government allowed us to restart production and commercial activities on May 20, 2020.

On July 10, 2021 the Government has decided to extend the state of health emergency nationwide for 31 calendar days from August 1, 2021, to August 31, 2021 in order to continue with the prevention, control and health care actions for the protection of the population of the entire country.

F-8

Notes to interim condensed consolidated financial statements (unaudited) (continued)

During the halt period, we were unable to generate income; however, the Company largely returned to the operating levels prior to the shut-down as of the month of August 2020. The Group has prepared interim condensed consolidated financial statements until June 30 2021 on a going concern basis, which assumes continuity of current business activities and the realization of assets and settlement of liabilities in the ordinary course of business.

Regarding financial obligations, we have not yet seen any changes in our access and cost of funding, however, at the beginning of the nationwide emergency state we took a bank overdraft line and short-term loans as a precautionary measure in order to cover our working capital needs, some of these loans have already been canceled and others are still outstanding as shown in note 9.

The Company has taken various measures to preserve the health of its employees and to prevent contagion in its administrative and operational areas, such as remote work, rigorous cleaning of work environments, distribution of personal protective equipment, test of suspicious cases and body temperature measurement.

2.	Basis of preparation and changes to the Group’s accounting policies
2.1	Basis<br> of preparation -
---	---

The interim condensed consolidated financial statements of the Group have been prepared in accordance with IAS 34 Interim Financial Reportingas issued by the International Accounting Standards Board (IASB). The interim condensed consolidated financial statements have been prepared on a historical cost basis, except for financial instruments designated at fair value through other comprehensive income (OCI) and derivatives financial instruments that have been measured at fair value. The interim condensed consolidated financial statements are presented in soles and all values are rounded to the nearest thousand (S/000), except when otherwise indicated. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. The Management consider that there are no material uncertainties that may cast significant doubt over this assumption. They have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and not less than 12 months from the end of the reporting period.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with Group’s annual consolidated financial statements as of December 31, 2020.

New standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with the policies considered in the preparation of the consolidated financial statements of the Group at December 31, 2020, except for the adoption of new standards effective as of 1 January 2021. The standards and interpretations relevant to the Group, that are effective since January 1, 2021 are disclosed below.

F-9

Notes to interim condensed consolidated financial statements (unaudited) (continued)

-	Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform

Theamendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedgingrelationships that are directly affected by interest rate benchmark reform, “LIBOR”. A hedging relationship is affected ifthe reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument.These amendments have no impact on the consolidated financial statements of the Group since it does not have financial debt agreed withthe reference interest rate “LIBOR” or associated hedging relationships.

The Group has not adopted early any standard, interpretation or modification that has been issued but is not yet in force.

The Group has not adopted in advance any other standard, interpretation or modification that has been issued but has not yet entered into force.

2.2	Basis<br> of consolidation -

The interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of June 30, 2021 and 2020.

As of June 30, 2021 and 2020, there was no changes in the participation of the common shares that the Company’s had on its subsidiaries; the main activities and information about subsidiaries are revealed on the consolidated financial statements as of December 31, 2020.

2.3	Seasonality<br> of operations -

Seasonality is not relevant to the Group’s activities.

3.	Cash and cash equivalents
(a)	This<br> caption consists of the following:
---	---
	As<br> of <br>June 30, <br>2021		As<br> of <br>December 31, <br>2020
---	---	---	---	---
		S/(000)		S/(000)
Cash<br> on hand		228		177
Cash<br> at banks (b)		353,424		22,510
Term<br> deposits with original maturities of ninety days or less (c)		15,000		286,225
		368,652		308,912
(b)	Cash<br> at banks is denominated in local and foreign currencies, is deposited in domestic and foreign<br> banks and is freely available. The cash at banks interest yield is based on daily bank deposit<br> rates.
---	---
(c)	The<br> short-term deposits held in domestic banks were freely available and earned interest at the<br> respective short-term market rates.
---	---

F-10

Notes to interim condensed consolidated financial statements (unaudited) (continued)

4.	Trade and other receivables

As of June 30, 2021 and December 31, 2020 this caption mainly include trade receivables, value-added tax credit (VAT), interest receivables and accounts receivables from related parties. At those dates, approximately 56% and 63 % of the trade receivables were guaranteed by banks guarantees and mortgages amounting to S/50,382,000 and S/46,484,000, respectively.

As of June 30, 2021 and 2020, the Group recorded S/1,193,000 and S/2,176,000, respectively, related to the provision for expected credit losses for trade receivables, which are presented in the caption “Sales and distribution expenses” of the interim condensed consolidated statement of income and; correspond to the best estimate of Management considering the current situation. The Group’s Management will continue evaluating the conditions of its client portfolio and, if deemed necessary, the corresponding provisions will be made.

The movement of the allowance for expected credit losses on trade and other receivable for the three-month period ended as of June 30, 2021 and 2020 is as follows:

	2021
		S/(000)	S/(000)
Opening<br> balance		14,358	12,781
Additions		1,193	2,176
Recoveries		-	(4	)
Ending<br> balance		15,551	14,953
5.	Inventories
---	---

As of June 30, 2021 and December 31, 2020 includes goods and finished products, work in progress, raw materials and other supplies to be used in the production process.

6.	Property, plant and equipment, net

During the three- and six-month periods ended June 30, 2021 the Group’s additions amounted approximately to S/18,864,000 and S/28,420,000 (S/4,391,000 and S/13,354,000 during the three- and six-month periods ended June 30, 2020, respectively).

Assets with a net book value of S/709,000 were sold during the six-month period ended June 30, 2021 (S/1,091,000 for the six-month period ended June 30, 2020), resulting in a net gain on disposal of S/1,159,000 (S/1,632,000 for the six-month period ended June 30, 2020).

As of June 30, 2021 the Group maintains accounts payable related to the acquisition of property, plant and equipment for S/3,853,000 (S/4,830,000 as of December 31, 2020).

F-11

Notes to interim condensed consolidated financial statements (unaudited) (continued)

7.	Leases

The Group has lease contracts with third parties, mainly a 5-year lease contract of trucks.

The Group also leases certain minor equipment for less than 12 months, the Group has decided to apply the recognition exemption for short term leases (less than 12 months) and for leases of low value assets. The expense for this type of lease amounted to S/660,000 for the six-month period ended June 30, 2021 (S/725,000 as of June 30, 2020) and was recognized in the “Administrative expenses” caption of the interim condensed consolidated statement of profit or loss.

The movement of the right of use assets recognized by the Group is shown below:

	Transportation units		Other			Total
	S/(000)		S/(000)			S/(000)
Cost -
Balance as of January 1, 2020		-		109			109
Additions		7,504		-			7,504
Sales and/or retirement		-		(72	)		(72	)
Balance as of June 30, 2020		7,504		37			7,541
Balance as of January 1, 2021		7,504		38			7,542
Additions		217		-			217
Sales and/or retirement		-		(3	)		(3	)
Balance as of June 30, 2021		7,721		35			7,756
Accumulated depreciation -
Balance as of January 1, 2020		-		63			63
Additions		750		20			770
Sales and/or retirement		-		(61	)		(61	)
Balance as of June 30, 2020		750		22			772
Balance as of January 1, 2021		1,501		35			1,536
Additions		775		-			775
Balance as of June 30, 2021		2,276		35			2,311
Net book value
As of December 31, 2020		6,003		3			6,006
As of June 30, 2021		5,445		-			5,445

F-12

Notes to interim condensed consolidated financial statements (unaudited) (continued)

The movement of the lease liabilities recognized by the Group is shown below:

	2021			2020
	S/(000)			S/(000)
Balance as of January, 1		6,633			57
Additions		217			7,504
Financial interest expense		185			200
Lease payments		(1,174	)		(531	)
Disposals		-			(19	)
Others		621			-
Balance as of June 30		6,482			7,211
Maturity
Current portion		1,711			1,479
Non-current portion		4,771			5,732
Balance as of June 30		6,482			7,211

The future cash disbursements in relation to lease liabilities have been disclosed in note 9.

8.	Trade, dividends and other payables

As of June 30, 2021 and December 31, 2020, this caption includes trade payables, account payables to related parties, interest payable, dividends payable among other minor payables.

On April 29, 2021, the Board of Directors agreed to distribute dividends amounting to S/338,204,000 (this amount does not include dividends corresponding to treasury shares), from unrestricted earnings for the years 2014 to 2019, which were paid during the first days of July of the year 2021.

As of June 30, 2021 dividends payable amounted to S/342,341,000 (S/ 7,686,000 as of December 31, 2020).

9.	Financial Obligations

Corporate bonds

On January 31, 2019, corporate bonds were issued in soles for S/260,000,000 at a rate of 6.688 percent per year and maturity of 10 years and; 15-year bonds for S/310,000,000 at a rate of 6.844 percent per year. As of June 30, 2021 and as of December 31, 2020 the corporate bonds issued in US Dollars amounts to US$131,612,000 with an annual rate of 4.5 per cent and maturity in 2023.

For the six-month period ended June 30, 2021 and 2020, the corporate bonds generated interests that have been recognized in the interim condensed consolidated financial statement of profit or loss for S/31,220,000 and S/30,314,000, respectively.

Bank loans

As of June 30, 2021, and December 31, 2020, the Company maintains a loan of US$18,000,000 maturing in July 2021 with an effective annual interest rate of 2.20 percent. Also, the Company maintains two loans of S/79,500,000 each maturing in January 2022 with an effective annual interest rate of 2.62 percent. As of the date of this report, the loan of US$ 18,000,000 was renegotiated with maturity in July 2022 and a rate of 1.80 percent per annum.

F-13

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Financial covenants –

The contracts for corporate bonds issued in US dollars and soles have the following covenants to limit incurring indebtedness for the Company and its guarantor subsidiaries, which are measured prior to the following transactions: issuance of debt or equity instruments, merger with another company or disposal or rental of significant assets. The covenants are the following:

- The debt service coverage ratio (includes amortization plus interest) must be at least 2.5 to 1.

- The financial debt to Ebitda ratio may not be greater than 3.5 to 1.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:


	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
As<br> of June 30, 2021
Financial<br> obligations	69,588	-	159,000	414,290	570,000	1,212,878
Interests	-	30,750	32,998	177,309	174,152	415,209
Trade<br> and other payables	-	134,194	60,741	-	-	194,935
Dividends<br> payable	342,341	-	-	-	-	342,341
Hedge<br> finance cost payable	-	7,563	7,563	15,125	-	30,251
Lease<br> liabilities	-	423	1,312	4,747	-	6,482
As<br> of December 31, 2020
Financial<br> obligations	-	-	65,232	572,993	570,000	1,208,225
Interests	-	30,033	35,056	186,607	193,454	445,150
Trade<br> and other payables	-	134,567	38,235	-	-	172,802
Dividends<br> payable	7,686	-	-	-	-	7,686
Hedge<br> finance cost payable	-	8,032	8,032	24,096	-	40,160
Lease<br> liabilities	-	-	383	1,148	5,102	6,633

10.	Provisions

As of June 30, 2021 and December 31, 2020, this caption includes workers’ profit sharing, provision for contingencies, long-term incentive plan and rehabilitation provision.

F-14

Notes to interim condensed consolidated financial statements (unaudited) (continued)

11.	Income tax

The Group calculates income tax expense of the period using the tax rate that would be applicable to the expected total annual earnings.

The major components of the income tax expense in the interim condensed consolidated statement of profit or loss and statement of other comprehensive income are:

	For the three-month period <br> ended June 30,					For the six-month period <br> ended June 30,
	2021			2020		2021			2020
	S/(000)			S/(000)		S/(000)			S/(000)
Current income tax		(10,928	)		1,400		(26,850	)		(1,913	)
Deferred income tax		(768	)		16,610		678			13,771
Total income tax expense (benefit) recognized in the interim consolidated statements of profit or loss		(11,696	)		18,010		(26,172	)		11,858
Income tax recognized in other comprehensive income		(159	)		888		(1,897	)		(523	)
Total income tax		(11,855	)		18,898		(28,069	)		11,335

The movement of the Group’s deferred income tax assets and liabilities is shown below:

	For the three-month period <br> ended June 30,					For the six-month period <br> ended June 30,
	2021			2020		2021			2020
	S/(000)			S/(000)		S/(000)			S/(000)
(Decrease) increase of deferred income tax asset (*)		(1,535	)		5,516		(2,179	)		7,613
Increase of deferred income tax liability(**)		608			11,982		960			5,635
Total variation of deferred income tax		(927	)		17,498		(1,219	)		13,248
Deferred income tax expense recognized in interim condensed consolidated statements of profit or loss		(768	)		16,610		678			13,771
Deferred income tax recognized in other comprehensive income		(159	)		888		(1,897	)		(523	)
Total variation of deferred income tax		(927	)		17,498		(1,219	)		13,248
(*)	As<br> of June 30, 2020 corresponds to the increase of tax-loss carry forward in the subsidiaries<br> Distribuidora Norte Pacasmayo S.R.L. and Dinoselva Iquitos S.A.C.
---	---
(**)	As<br> of June 30, 2020 corresponds to difference of bases.
---	---

F-15

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Following is the composition of deferred tax related to items recognized in other comprehensive income:

	For the three-month period ended June 30,					For the six-month <br>period ended June 30,
	2021			2020		2021			2020
	S/(000)			S/(000)		S/(000)			S/(000)
(Loss) gain unrealized on derivative financial instruments		(159	)		888		(1,897	)		(523	)
Total deferred income tax in OCI		(159	)		888		(1,897	)		(523	)
12.	Sales of goods
---	---

This caption is made up as follows:

	Cement, concrete and precast		Quicklime		Construction Supplies		Other		Total
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Forthe three-month period ended June 30, 2021
Revenue from external customers		405,636		7,601		27,618		68		440,923
Revenue from external customers		405,636		7,601		27,618		68		440,923
Forthe six-month period ended June 30, 2021
Revenue from external customers		836,103		16,116		53,281		228		905,728
Revenue from external customers		836,103		16,116		53,281		228		905,728
Forthe three-month period ended June 30, 2020
Revenue from external customers		102,285		6,300		5,736		24		114,345
Revenue from external customers		102,285		6,300		5,736		24		114,345
Forthe six-month period ended June 30, 2020
Revenue from external customers		379,715		13,246		20,391		251		413,603
Revenue from external customers		379,715		13,246		20,391		251		413,603

F-16

Notes to interim condensed consolidated financial statements (unaudited) (continued)

13.	Related party transactions

During the six-months periods ended June 30, 2021 and 2020, the Group carried out the following main transactions with Inversiones ASPI S.A. and its related parties:

	For the three-month period <br>ended June 30,				For the six-month period <br> ended June 30,
	2021		2020		2021		2020
	S/(000)		S/(000)		S/(000)		S/(000)
Income
Inversiones ASPI S.A.
Fees from office lease		5		3		10		6
Fees for management and administrative services		25		136		48		272
Compañía Minera Ares S.A.C. (Ares)
Fees from land rental services		297		333		580		660
Fees from leasing of parking		94		83		220		165
Fosfatos del Pacífico S.A. (Fospac)
Fees from office lease		3		7		9		14
Fees for management and administrative services		12		290		131		580
Fossal S.A.A. (Fossal)
Fees from office lease		5		4		10		8
Fees for management and administrative services		13		10		25		20
Asociación Sumac Tarpuy
Fees from office lease		5		-		10		-
Expenses
Security services provided by Compañía Minera Ares S.A.C.		660		475		1,320		950

F-17

Notes to interim condensed consolidated financial statements (unaudited) (continued)

As a result of these and other transactions, the Group had the following rights and obligations with Inversiones ASPI S.A. and its related parties as of June 30, 2021 and December 31, 2020:

	June 30, <br> 2021				December 31, <br> 2020
	Accounts <br> receivable		Accounts <br> payable		Accounts <br> receivable		Accounts <br> payable
	S/(000)		S/(000)		S/(000)		S/(000)
Fosfatos del Pacífico S.A.		1,209		89		1,449		-
Compañía Minera Ares S.A.C.		1,128		945		678		1,348
Fossal S.A.		105		-		-		-
Inversiones ASPI S.A.		-		137		-		211
Other		22		-		85		-
		2,464		1,171		2,212		1,559

Outstanding balances are unsecured and interest free. There have been no guarantees provided or received from any related party. As of June 30, 2021 and December 31, 2020, the Group has not recorded any allowance for expected credit losses on receivables from related parties.

Compensationof key management personnel of the Group -

The compensation paid to key management personnel includes expenses for profit-sharing, compensation and other concepts for members of the Board of Directors and the key management. The total short-term compensations expense amounted to S/5,155,000 and S/10,270,000 during the three and six-month periods ended June 30, 2021, respectively (S/5,179,000 and S/12,491,000 during the three and six-month periods ended June 30, 2020), and the total long-term compensations expense amounted to S/1,968,000 and S/3,639,000 during the three and six-month periods ended June 30, 2021, respectively (S/1,440,000 and S/2,879,000 during the three and six-month period ended June 30, 2020, respectively). The Group does not compensate Management with post-employment or contract termination benefits or share-based payments.

14.	Earnings per share (EPS)

Basic earnings per share amounts are calculated by dividing net profit for the six-month period ended June 30, 2021 and 2020 by the weighted average number of common and investment shares outstanding during those periods.

The Group has no dilutive potential common shares as of June 30, 2021 and 2020.

F-18

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Calculation of the weighted average number of shares and the basic earnings per share is presented below:

	For the three-month period <br>ended June 30,					For the six-month period <br>ended June 30,
	2021		2020			2021		2020
	S/(000)		S/(000)			S/(000)		S/(000)
Numerator
Net profit attributable to ordinary equity holders of the Parent		27,664		(45,549	)		59,465		(34,825	)

	For the three-month period<br> <br>ended June 30,					For the six-month period<br> <br>ended June 30,
	2021		2020			2021		2020
	S/(000)		S/(000)			S/(000)		S/(000)
Denominator
Weighted average number of common and investment shares (thousands)		428,107		428,107			428,107		428,107
Basic profit for common and investment shares		0.06		(0.11	)		0.14		(0.08	)

There have been no other transactions involving common and investment shares between the reporting date and the date of completion of these interim condensed consolidated financial statements.

15.	Financial assets and liabilities
(a)	Financial<br> asset –
---	---

Derivatives assets of hedging -

Foreigncurrency risk –

As of June 30,2021 the Group maintains Cross currency swap contracts for a nominal amount of US$132,000,000 (US$ 150,000,000 as of December 31, 2020), with maturity in 2023 and a rate of 2.97%. Of this total, US$131,612,000 have been designated as hedging instruments for Senior notes that are denominated in U.S. dollars, with the intention of reducing the foreign exchange risk.

The cash flow hedge of the expected future payments was assessed to be highly effective and an unrealized gain of S/6,432,000 for the six-month period ended June 30, 2021 (gain of S/1,773,000 for the six-month period ended June 30, 2020) is included in the interim condensed consolidated statement of other comprehensive income. The amounts retained in other comprehensive income as of June 30, 2021 are expected to mature and affect the consolidated statement of profit or loss in 2023, settlement year of cross currency contracts.

Derivate assets from trading -

As of June 30, 2021 and 2020, cross currency swaps that do not have an underlying hedging relationship amounts to US$388,000 and US$18,388,000, respectively, have been designated as trading. The effect on profit or loss from its measurement at fair value was a gain of S/500,000 and S/4,391,000 for the six-month period ended June 30, 2021 and 2020, respectively.

F-19

Notes to interim condensed consolidated financial statements (unaudited) (continued)

(b)	Fair<br> values and fair value accounting hierarchy –

Set out below is a comparison of the carrying amounts and fair values of financial instruments of the Group, as well as the fair value accounting hierarchy:

	Carrying amount				Fair value				Fair value hierarchy
	2021		2020		2021		2020		2021/2020
	S/(000)		S/(000)		S/(000)		S/(000)
Financial assets
Cash and cash equivalents		368,652		308,912		368,652		308,912	Level 1
Trade and other receivables		106,033		89,627		106,033		89,627	Level 2
Derivative financial assets -“cross currency swaps”		75,533		42,247		75,533		42,247	Level 2
Financial instruments at fair value through other comprehensive income		692		692		692		692	Level 3
Total financial assets		550,910		441,478		550,910		441,478
Financial liabilities
Trade and other payables		200,135		180,190		200,135		180,190	Level 2
Dividends payable		342,341		7,686		342,341		7,686	Level 2
Senior notes		1,076,610		1,044,352		1,107,558		1,118,492	Level 1
Fixed rate notes		228,588		224,232		229,887		221,607	Level 2
Total financial liabilities		1,847,674		1,456,460		1,879,921		1,527,975

All financial instruments for which fair value is recognized or disclosed are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy. As of June 30, 2021 and December 31, 2020, there were no transfers between the fair value hierarchies.

F-20

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Management assessed that cash and term deposits, trade and other receivables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair values:

-	The<br> fair value of cross currency swaps is measured by using valuation techniques where inputs<br> are based on market data. The most frequently applied valuation techniques include swap valuation<br> models, using present value calculations. The models incorporate various inputs, including<br> the credit quality of counterparties, foreign exchange, forward rates and interest rate curves.

A credit valuation adjustment (CVA) is applied to the “Over-The-Counter” derivative exposures to take into account the counterparty’s risk of default when measuring the fair value of the derivative. CVA is the mark-to market cost of protection required to hedge credit risk from counterparties in this type of derivatives portfolio. CVA is calculated by multiplying the probability of default (PD), the loss given default (LGD) and the expected exposure (EE) at the time of default.

A debit valuation adjustment (DVA) is applied to incorporate the Group’s own credit risk in the fair value of derivatives (that is the risk that the Group might default on its contractual obligations), using the same methodology as for CVA.

-	The<br> fair value of the quoted senior notes is based on the current quotations value at the reporting<br> date.
-	The<br> fair value of the promissory note is calculated using the results of cash flow discounted<br> at the indebtedness market rates effective as of the date of estimation.
---	---
16.	Commitments and contingencies
---	---

Operating lease commitments – Group as lessor

As of June 30, 2021, the Group, as lessor, has a land lease with Compañía Minera Ares S.A.C., a related party of Inversiones ASPI S.A. This lease is annually renewable, and provided a rent for the six-month period ended June 30, 2021 and 2020 for S/580,000 and S/659,000, respectively.

Capital commitments

As of June 30, 2021, the Group had no significant capital commitments.

Environmental matters

The Group exploration and exploitation activities are subject to environmental protection standards. Such standards are the same as those disclosed on the consolidated financial statement as of December 31, 2020.

F-21

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Taxsituation

The Company is subject to Peruvian tax law. As of June 30, 2021 and 2020, the income tax rate is 29.5 percent of the taxable profit after deducting employee participation, which is calculated at a rate of 8 to 10 percent of the taxable income.

For purposes of determining income tax, transfer pricing transactions with related companies and companies resident in territories with low or no taxation, must be supported with documentation and information on the valuation methods used and the criteria considered for determination. Based on the analysis of operations of the Group, Management and its legal advisors believe that as a result of the application of these standards will not result in significant contingencies for the Group as of June 30, 2021 and December 31, 2020.

During the four years following the year tax returns are filed, the tax authority has the power to review and, as applicable, correct the income tax computed by each individual company.

The income tax and value-added tax returns for the following years are open for review by the tax authority

	Years<br> open to review by Tax Authorities
Entity	Income<br> tax	Value-added<br> tax
Cementos<br> Pacasmayo S.A.A.	2016-2020	Dec.2016-2021
Cementos<br> Selva S.A.	2016-2020	Dec.2016-2021
Distribuidora<br> Norte Pacasmayo S.R.L.	2016-2020	Dec.2016-2021
Empresa<br> de Transmisión Guadalupe S.A.C.	2016-2020	Dec.2016-2021
Salmueras<br> Sudamericanas S.A.	2016-2020	Dec.2016-2021
Calizas<br> del Norte S.A.C. (on liquidation)	2016-2020	Dec.2016-2021
Soluciones<br> Takay S.A.C.	2019-2020	May<br> to Dec.2019-2021

Due to possible interpretations that the tax authorities may give to legislation in effect, it is not possible to determine whether any of the tax audits that may be performed will result in increased liabilities for the Group. For that reason, tax or surcharge that could arise from future tax audits would be applied to the income during the period in which it is determined. However, in management’s opinion, any possible additional payment of taxes would not have a material effect on the interim condensed consolidated financial statements as of June 30, 2021 and the consolidated financial statements as of December 31, 2020.

F-22

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Legalclaim contingency

As of June 30, 2021, some third parties have commenced actions against the Group in relation with its operations which claims in aggregate represent S/13,024,000. From this total amount, S/3,045,000 corresponded to labor claims from former employees; S/7,681,000 linked to resolutions of determination and fine on the property tax of the periods 2009 to 2014 issued by the District Municipality of Pacasmayo and S/2,298,000 related to the tax assessments received from the tax administration corresponding to 2009 tax period, which was reviewed by the tax authority during 2012.

Management expects that these claims will be resolved within the next five years based on prior experience; however, the Group cannot assure that these claims will be resolved within this period because the authorities do not have a maximum term to resolve cases.

The Group has been advised by its legal counsel that it is only possible, but not probable, that these actions will succeed. Accordingly, no provision for any liability has been made in these interim condensed consolidated financial statements.

Mining royalty

The Group signed agreements with third parties and with Peruvian Government related to the use of concessions for extraction activities on process of cement production. The information of the payment of royalties are reveled on the consolidated financial statements of the Group as of December 31, 2020.

F-23

Notes to interim condensed consolidated financial statements (unaudited) (continued)

17.	Segment information

For management purposes, the Group is organized into business units based on their products and activities, and have three reportable segments as follows:

-	Production<br> and marketing of cement, concrete and precast in the northern region of Peru.
-	Sale<br> of construction supplies in the northern region of Peru.
---	---
-	Production<br> and marketing of quicklime in the northern region of Peru.
---	---

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the profit before income tax of each business units separately for the purpose of making decisions about resource allocation and performance assessment.

Transfer prices between operating segments are on an arm’s length basis in a similar manner to transactions with third parties.

	Revenues from external customers				Gross margin					Profit (loss) before income tax						Income<br> tax						Profit (loss) for the period
	2021		2020		2021		2020			2021			2020			2021			2020			2021			2020
	S/(000)		S/(000)		S/(000)		S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)
For the three-month period ended June 30,
Cement, concrete and precast		405,636		102,285		114,706		1,877			41,001			(61,445	)		(12,184	)		17,642			28,817			(43,803	)
Construction supplies		27,618		5,736		1,039		(409	)		(1,244	)		(1,663	)		368			402			(876	)		(1,261	)
Quicklime		7,601		6,300		487		879			(26	)		423			11			(136	)		(15	)		287
Other		68		24		169		(205	)		(371	)		(874	)		109			102			(262	)		(772	)
Total		440,923		114,345		116,401		2,142			39,360			(63,559	)		(11,696	)		18,010			27,664			(45,549	)
For the six-month period ended June 30,
Cement, concrete and precast		836,103		379,715		246,289		92,616			89,067			(43,035	)		(27,220	)		10,931			61,847			(32,104	)
Construction supplies		53,281		20,391		1,638		578			(2,909	)		(1,842	)		889			468			(2,020	)		(1,374	)
Quicklime		16,116		13,246		1,575		1,178			464			171			(142	)		(44	)		322			127
Other		228		251		125		(219	)		(985	)		(1,977	)		301			503			(684	)		(1,474	)
Total		905,728		413,603		249,627		94,153			85,637			(46,683	)		(26,172	)		11,858			59,465			(34,825	)

F-24

Notes to interim condensed consolidated financial statements (unaudited) (continued)

	Segment<br><br> assets		Other <br><br> Assets (**)		Total<br> <br> asset		Total liabilities<br><br> by segment
	S/(000)		S/(000)		S/(000)		S/(000)
As<br> of June 30, 2021
Cement,<br> concrete and precast		2,912,976		75,302		2,988,278		1,981,980
Construction<br> supplies		46,715		-		46,715		67,234
Quicklime		75,429		-		75,429		-
Other<br> (*)		31,313		923		32,236		93
Total		3,066,433		76,225		3,142,658		2,049,307
As<br> of December 31, 2020
Cement,<br> concrete and precast		2,806,803		37,068		2,843,871		1,590,105
Construction<br> supplies		51,225		-		51,225		58,517
Quicklime		83,621		-		83,621		-
Other<br> (*)		31,696		5,871		37,567		107
Total		2,973,345		42,939		3,016,284		1,648,729
(*)	The<br> “Other” segment includes activities that do not meet the threshold for disclosure<br> under IFRS 8.13 and represent non-material operations of the Group.
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(**)	As<br> of June 30, 2021 corresponds to the financial instruments designated at fair value through<br> other comprehensive income and to the fair value of derivative financial instruments (cross<br> currency swap) for approximately S/692,000 and S/75,533,000, respectively. As of December<br> 31, 2020 corresponds to the financial instruments designated at fair value through other<br> comprehensive income for approximately S/692,000 and fair value of derivative financial instruments<br> (cross currency swap) for approximately S/42,247,000. The fair value of hedge derivative<br> financial instruments is allocated to the segment of cement, and the financial instruments<br> designated at fair value through other comprehensive income and the fair value of the trading<br> derivative financial instrument are presented as “Other”.
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Geographic information

As of June 30, 2021 and December 31, 2020, all non-current assets are located in Peru and all revenues are from Peruvian clients.

F-25

Notes to interim condensed consolidated financial statements (unaudited) (continued)

18.	Financial risk management, objectives and policies

The Group´s main financial assets include cash and short-term deposits (with maturity less than 360 days) and trade and other receivables that derive directly from its operations. The Group also holds financial instruments designated at fair value through OCI, cash flow hedges instruments and derivative financial instruments of trading. The Group’s main financial liabilities comprise trade payables and other payables, loans and borrowings, with short-term and long-term maturities. The main purpose of these financial liabilities is to finance the Group’s operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks. The Group’s senior management is supported by financial management that advises on financial risks and the appropriate financial risk governance framework for the Group. The financial management provides assurance to the Group’s senior management that the Group’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group´s policies and risk objectives.

The Management reviews and agrees policies for managing each of these risks as mentioned in the consolidated financial statements as of December 31, 2020.

Foreigncurrency risk -

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange relates primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional currency).

The Group hedges its exposure to fluctuations on the translation into soles of its Senior Notes which are denominated in US dollars, by using cross currency swaps contracts, see note 15.

F-26

Notes to interim condensed consolidated financial statements (unaudited) (continued)

Foreigncurrency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in the US dollar exchange rate, with all other variables held constant. The impact on the Group’s profit before income tax is due to changes in the fair value of monetary assets and liabilities.

As<br> of June 30, 2021	Change<br> in<br> US$ rate	Effect<br> on <br> consolidated <br><br> profit <br> before tax
U.S.<br> Dollar	%	S/(000)
	+5		1,039
	+10		2,079
	-5		(1,039	)
	-10		(2,079	)
As<br> of June 30, 2020	Change<br> in<br> US$ rate	Effect<br> on <br> consolidated<br><br> profit <br> before tax
---	---	---	---	---
U.S.<br> Dollar	%	S/(000)
	+5		(1,730	)
	+10		(3,459	)
	-5		1,730
	-10		3,459

Liquidityrisk -

The Group monitors its risk of shortage of funds using a recurring liquidity planning tool.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and debentures of long term. Access to fund sources is sufficiently available and debt maturing within 12 months can be rolled over under the same conditions with existing lenders, if necessary.

As of June 30, 2021 and December 31, 2020, no portion of the corporate bonds will mature in less than one year.

Riskmanagement activities –

As a result of its activities, the Group is exposed to the foreign currency exchange rate risk, thereof the Company has acquired hedging financial instruments to cover this risk. Since November 2014, the Group has hedged its exposure to foreign currency from its corporate bonds (denominated in US dollars). During the six-month period ended June 30, 2021, there was moderate volatility in the US dollar exchange rate with respect to the soles, whose effects were partially mitigated by the exchange rate hedge maintained by the Company.

As of June 30, 2021 and December 31, 2020, except for the derivatives financial instruments (cross currency swaps) signed by the Company to hedge the foreign currency risk of its Senior Notes, the Group had no other financial instruments to hedge its foreign exchange risk, interest rates or market price (purchase price of coal) fluctuations.

F-27

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